Everything You Need to Know about Narcissists, Psychopaths, and Abuse - click on this link: http://www.narcissistic-abuse.com/faq1.html
Narcissists exhibit the cognitive bias known as the “Dunning-Kruger effect”: they are deluded about the true level of their abilities, knowledge, and skills. But, they tend to sustain this delusion also by devaluing and underestimating others.
Grandiosity can be conceived of as a set of cognitive biases constructed on an edifice of cognitive deficits which emanate from a profoundly flawed reality test.
(From the book "Malignant Self-love: Narcissism Revisited" by Sam Vaknin - Click on this link to purchase the print book, or 16 e-books, or 3 DVDs with 16 hours of video lectures on narcissists, psychopaths, and abuse in relationships: http://www.narcissistic-abuse.com/thebook.html)